Contracts and Coronavirus: electronic signatures

The COVID-19 pandemic has forced many lawyers and their clients to work from home. Lockdown and social distancing restrictions mean that in-person signing of deeds and documents is no longer practical. It may even be difficult to sign a document, scan it and send the scanned, signed page by email. Electronic signatures are not a new concept, but in the current climate there is an increasing focus on how documents can be signed electronically.

In this brief note, we consider electronic signatures generally and set out some brief questions and answers. It is unlikely that there is a genuine ‘one size fits all’ approach. In some circumstances a pragmatic approach might work – in others that same approach might not be legally binding. If in doubt, speak to your usual contact at Burnetts who will be able to give you specific advice.

What is an electronic signature?

An electronic signature is a signature in electronic form where the person does not actually, physically put pen to paper when signing. There can be various forms of electronic signature and these can include a person typing their name into a contract, using a JPEG image of their signature and affixing that into a contract; signing electronically using a finger or stylus on a touchscreen or signing through an e-signing platform.

No matter which way they sign, it is important that the person signing intends to sign and to be bound by the document they are signing. In some cases, formalities will need to be satisfied. Examples include where there is a requirement that a signature must be witnessed.

What about security?

Although it does not affect the legal validity of an electronic signature, it is important to consider how trustworthy, secure and reliable the technology used to create it is. For example, a typed name at the end of a document is very easy to forge. Similarly, anyone with access to a scanned manuscript signature may copy and paste it into any document. Electronic signatures are only as secure as the business processes and technology used to create them. As a general (and potentially obvious) rule of thumb, higher value transactions need better quality electronic signatures – that is to say that any signatures used for these transactions need to be more securely linked to the owner in order to provide the level of assurance needed and to ensure trust in the underlying system.

A number of Government bodies have relaxed their requirements with respect to electronic signatures in the current crisis. Companies House has changed its policy to allow the use of electronic signatures on all documents, including forms and resolutions. HMRC also has in place temporary measures which allow them to accept documents submitted by email and documents that have been signed electronically.

Of course, it will be important to check on a case-by-case basis what type of signature is appropriate.

What is the position where a signature must be witnessed?

The current position is that witnessing formalities require the witness to be physically present in the same location as the person signing the document and to observe the electronic signing of the document. Although there is no legal prohibition on a spouse, civil partner or cohabitee acting as a witness (except where they are also a party to the contract) this is best avoided. The purpose of having a witness is so that they can provide unbiased evidence that the document was properly executed.

It is therefore best practice for the witness to be independent of the signatory. If a signatory and their family are self-isolating during the COVID-19 outbreak, however, this may pose a challenge. Witnessing by a family member may be the only viable option in such circumstances.

Where an e-signing platform is used, additional formalities may apply, especially in the case of a document that has to be signed as a deed. Your usual contact at Burnetts will be able to assist.

Practical points

• Plan in advance what is appropriate for your contract. Sometimes signature is not a legal requirement – it is an indication that the parties have made an agreement which satisfies the legal requirements for a contract. In these cases, signature by whatever method the parties are happy with will be sufficient. Agreement as to how everyone will sign should be clarified as soon as possible.
• If an electronic signature is not appropriate, consider whether it be easier to sign in the usual way and then print/scan or photograph and send the document.
• If you are signing on behalf of an organisation, check what the constitution requires, including (for example in the case of a limited company) who is authorised to sign. This is also important for unincorporated charities or other associations without legal personality.
• Keep a record of the reasons for which it has been agreed that an e-signature is the best option, particularly if the circumstances are unusual. If the intention is for a ‘wet-ink’ signature to be obtained in due course, ensure that this is noted and that the documents are re-signed with a wet-ink signature as soon as possible.

Finally, all contracts are not created equal - remember that what is appropriate, enforceable and compliant with the law will not be the same for every agreement. Please get in touch if you require specific guidance as to whether or not an electronic signature is appropriate for your particular circumstances.